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How Low Will The GreenBack Go???
Old 09-23-2004, 02:05 PM   #1
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How Low Will The GreenBack Go???

The Greenback is really hurting me. Is anyone else suffering? Livinig abroard most of the time is getting more and more expensive. When I moved to Canada the Dollar was 1.55 CAN now is it 1.28, on $1m that equates to $270k loss. That is a house in my books. I do not even want to think about the Euro rates.

Will The Government ever stop spending more than they take in?? Or do we simply get poorer and poorer?

At this rate, the USA is going to go from one of the richest countries to one of the poorest. DOESN'T any one care? Or is all people vote for these days to do with Abortion, the ability to buy assault weapons, Who served under whom in the military 30 years ago and where, or other equally economically useless topics.

I do not mean to offend anyone, but it is getting ridiculous. We should vote for the good of the country, not those of people abroad, or the right to blow apart rabbits with AK 47s. How about keeping more jobs IN AMERICA.

SWR
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Re: How Low Will The GreenBack Go???
Old 09-23-2004, 03:15 PM   #2
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Re: How Low Will The GreenBack Go???

SWR,
Sorry to hear about your exchange rate issues. I agree that trying to ER in first world countries that don't have weak currencies could be problematic. Developing countries with weak currencies (such as Costa Rica) need to raise hard currency on an ongoing basis to grow. Their currency is constantly being devalued at a rate that is very close to their inflation rate. So, if you keep your investments in dollars you have a good hedge against inflation if you ER in developing countries. I don't know of any good exchange rate strategies for ER in developed coutries.

Good luck,
Surf


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Re: How Low Will The GreenBack Go???
Old 09-23-2004, 06:14 PM   #3
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Re: How Low Will The GreenBack Go???

Go to:
www.fxstreet.com
read up on the long term expectations for the US$.
some estimates for at least euro = US$1.30
like oil I think the US$ could be be devalued for quite some time.
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Re: How Low Will The GreenBack Go???
Old 09-23-2004, 10:00 PM   #4
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Re: How Low Will The GreenBack Go???

Yeah, the dollar will probably be weak for the near term-too many USD floating around world wide IMHO.

I keep a small position in (Vanguard) foreign index funds as a "hedge." We'll see how successful this strategy is 8) having a position in "natural resources" might help. e.g; Canada has huge natural resources, so when they (natural resources) are in demand, the Canadian dollar shold strengthen.

Anyway, I figure my most advantageous "hedge' is living in Thailand and the low cost of living here. But, the weak dollar will hurt we expat ERs.

IF anyone has the magic answer (hedging strategy) please share!

Lance



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Re: How Low Will The GreenBack Go???
Old 09-28-2004, 08:37 AM   #5
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Re: How Low Will The GreenBack Go???

How about Billy & Akaisha, do you have any comments here? They have been at it through thick and thin, for a long time. China is pegged to the US Dollar so it may not affect them too much.

SWR
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Re: How Low Will The GreenBack Go???
Old 09-29-2004, 05:32 PM   #6
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Re: How Low Will The GreenBack Go???

The Dollar's movement is not a factor in our lifestyle abroad, due to the amount of money we spend per year. Do the math. If the Dollar moves plus or minus 10 %, it's not going to effect us much. At least not enough to concern us. It's always nice when it moves in our favor but I do not try to play exchange rates. No matter what happens to the US Dollar, there are always options. We have been in Thailand when the Baht was between 38-45 per Dollar, and noticed little difference. Also, while in Mexico, the Peso went from 3.50-7.00 over night. That was a bargain for a short time, until the shop owners raised their prices to reflect the change.

I would look at this differently if I were to invest into these countries, or place large sums into their banks. But we keep everything in the US.

My point is that I do not lose sleep over this. IMO inflation is more of a concern in these countries.

Billy
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Re: How Low Will The GreenBack Go???
Old 09-30-2004, 06:15 AM   #7
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Re: How Low Will The GreenBack Go???

Billy:

I agree for +/-10%, but the dollar has lost double that, over 25% against most significant world currencies (UK, Euro, DM, Can $ etc) in the last 2 years. That is a big deal in my books.

SWR
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Re: How Low Will The GreenBack Go???
Old 09-30-2004, 09:41 AM   #8
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Re: How Low Will The GreenBack Go???

SWR,
I was reading an article where Warren Buffett said the dollar will likely drop ~ 40%. Not sure the date of the article, but that might mean that the dollar could drop 15- 20 +% further from here.

Surf
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Re: How Low Will The GreenBack Go???
Old 09-30-2004, 12:52 PM   #9
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Re: How Low Will The GreenBack Go???

SWR,
That's why we avoid high cost countries...once you ER, you have all kinds of choices. We avoid places where the costs are high, either due to currency or inflation. It's up to you. Right now, Asia, Argentina are bargains, next year, who knows?

Billy
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Re: How Low Will The GreenBack Go???
Old 09-30-2004, 01:10 PM   #10
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Re: How Low Will The GreenBack Go???

Billy,
Billy, I agree on avoiding high cost countries....such as Europe right now. Thanks for the info. I'm heading to Mexico next week and then on to South America. This will be my first trip to South America ! I'll be in Brazil for 2-3 months, then maybe Chile and Peru. How does the living cost in Argentina compare to say Thailand? Why is SE Asia a bargain now?

Surf
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Re: How Low Will The GreenBack Go???
Old 09-30-2004, 04:53 PM   #11
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Re: How Low Will The GreenBack Go???

Surf,
We have been in and out of Asia the last four years, and it is still a good value for us. As for Argentina, we have not yet been there, so perhaps I was speaking out of school, but I do have friends that both visit and live there and they tell me to "come on down". Argentina had a devaluation a few years back, and it's a deal for foreigners. So my guess in comparing it to Thailand is that it's about the same. Regarding Mexico, please tell mi amigos, HOLA. Sounds like you've got a good trip planned. Safe travels.

Billy
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Re: How Low Will The GreenBack Go???
Old 10-01-2004, 02:56 PM   #12
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Re: How Low Will The GreenBack Go???

Billy,
Thanks for the info. I was in SE Asia for 7 months in 1999 and loved it....I'll definitely go back. Maybe we'll run into each other in Argentina or Thailand.

Cheers,

Surf
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Re: How Low Will The GreenBack Go???
Old 10-03-2004, 03:26 PM   #13
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Re: How Low Will The GreenBack Go???

SWR, I follow the trends of the US$ against the $C closely as I am a Canadian expat in USA. A good portion (about half) of my investment portfolio is US based (NYSE) as are the stock options of my American multi-national. 2003 was brutal with about 18% depreciation of US$ against C$. I just broke even on my investment portfolio in 2003 (as measured in C$) as a result. Obviously, my US$ cash account suffered virtually the full 18% decline in value. That is the risk of diversifying across more than one country.

And it is going to get worse. I agree the Euro will continue to strengthen some against US$ - perhaps to $1.30 but not much more. Europe has its own problems with deficits, slow growth and looming social spending (pension) problems.

The bad news is that Canada will continue to appreciate to maybe $1.10 - $1.15 range as a minimum due to budget surpluses and continued paying down of outstanding debt. I think it takes getting close to "hitting the wall" to get politicians to make the hard choices they have to do to turn things around. Canada got close to a fiscal crisis in 1993 with debt at X% of GDP and had to make severe changes to make it better. Canada is now reaping the fruit of its hard choices.

The US is going to have to do the same. Bush is doing just what Reagan did....huge budget deficits. While it stimulates the economy initially, GDP cannot grow that much to work its way entirely out of deficit. I only hope for your sake (and mine) that the next prez will do something about it. The fact that neither Bush nor Kerry have mentioned anything about it is scary. And I'm not holding my breath that either of them will shed any encouragement when they debate the economy.
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